Directors and Officers Liability

​​​​Directors and officers have a duty to exercise due diligence in overseeing the management of the organization that they serve. They are required to act in good faith and in the best interest of the organization. Claims or potential claims must be promptly reported.​

​3 Basic Duties

Directors and officers have a duty to exercise due diligence in overseeing the management of the organization that they serve. This involves 3 basic duties:

Duty of Diligence (Duty of Care): Act reasonably, in good faith and in the organization’s best interest.

Duty of Loyalty: Place the interest of the organization before your own.

In addition to basic duties, a director or officer may be held liable for:

Failure to act as stated under a statute.For example, if a statute requires directors to file a report or maintain certain records, and these reports or records are not maintained, the director may be liable for an offence under that statute.

Non-compliance of the organization with a statute.For example, directors may be liable for financial losses, wrongful dismissal, employee discrimination or failure to remediate environmental damage. Be aware that directors can be held personally liable and that:

​Managing Liability Risk

Organizations with paid or volunteer boards should be aware that directors and officers have very specific duties and obligations. Directors and officers should be given all of the appropriate information that is required to perform their duties effectively.